Profit of M. Dias Branco falls 21.1% in the 4th quarter, but has high in 2020 – Money Times

Earnings before interest, taxes, depreciation and amortization (Ebitda) reached 192.2 million reais in the quarter, a reduction of 33.5% (Image: YouTube / M. Dias Branco)

M. Dias Branco (MDIA3), leader in the biscuit and pasta markets in the Brazil, recorded net income of R $ 209 million in the fourth quarter of 2020, down 21.1% compared to the same period of the previous year, pressured by higher costs with wheat e exchange, while domestic demand retreated.

In the same vein, earnings before interest, taxes, depreciation and amortization (Ebitda) reached 192.2 million reais in the quarter, a reduction of 33.5% compared to the same period in 2019, the company said in the balance sheet on Wednesday, citing that the end of the emergency aid impacted the results.

Net revenue remained practically stable, with a positive change of 0.4% year on year, to 1.7 billion reais, affected by a decrease in households’ purchasing power.

Breaking a cycle of increase seen since the beginning of the Covid-19 pandemic, the last three months of the year marked a 15.5% drop in total sales volume, to 415.7 thousand tons, in relation to the same interval of 2019. biscuit sales decreased 10% and pasta sales, 9.9%.

Coronavirus, Sao Paulo
Breaking a bullish cycle seen since the beginning of the Covid-19 pandemic, the last three months of the year marked a 15.5% drop in total sales volume (Image: REUTERS / Amanda Perobelli)

“We understand that there was a relationship with the end of the emergency aid, since in the second and third quarters there was an increase in the demand for cookies and pasta,” Fabio Cefaly, executive director for Investor Relations and New Business, told Reuters.

He pointed out that the company gained “market share” compared to its competitors, but volumes fell. “This account closes when we look at the market, (because) the market also fell,” he said.

Parallel to this, Cefaly said that M. Dias has been adjusting the values ​​of the products sold to restore the margins that are affected by increases in expenses.

“When we put a price, we feel in the volumes,” said the executive, recalling that in October a 10% increase was applied to the values ​​of the masses, something that contributed to the reduction in sales in the last quarter of 2020.

In January, M. Dias made another 10% increase in prices, but this time not only in the masses but in the entire product portfolio.

Biscuits Food
In January, M. Dias made another 10% price increase (Image: Freepik)

The director explained that the main factor that made the company’s costs more expensive was the appreciation of the dollar, due to the exchange rate impact on raw materials such as wheat and palm oil.

In addition, he pointed out that cereal prices in dollars rose 12.5% ​​in the fourth quarter compared to the same period last year. “We saw wheat rising in dollars, the appreciation of the American currency … and the entry of the national harvest did not generate a relevant impact to lower expenses,” he said.

Traditionally, M. Dias Branco uses domestic wheat and imported products from different origins, such as Argentina, the United States, Russia and Canada to make blends used in food production.

It is also worth noting that the company has a high level of verticalization of inputs for the industrial process, since 99.6% of the wheat flour consumed by the company is of its own production – which justifies the effects caused by the variation in prices of cereal and corn. exchange.

Annual Performance

Despite a challenging fourth quarter, M. Dias Branco accumulated a 37.2% rise in net income in 2020, to 763.8 million reais, while Ebitda rose 26.2%, to 974.3 million reais.

Biscuits, Piraquê, M. Dias Branco
Despite a challenging fourth quarter, M. Dias Branco accumulated a 37.2% increase in net income in 2020 (Image: YouTube / M. Dias Branco)

Annual net revenue grew 18.8% to 7.25 billion reais, driven by increases in both the volume of biscuit sales (11.7%) and pasta (22%). In addition to the growth in sales, the company also saw a 6.1% increase in the average price of the product portfolio.

“Profit for the year grew mainly due to revenue and increased demand in the second and third quarters … despite the fact that the year was marked by very high costs,” said Cefaly.

He calculates that the company had a negative impact of around 680 million reais just due to the dollar.

On the other hand, the executive pointed out that leverage – as measured by the ratio between net debt and Ebitda – closed 2020 at 0.4 times, below the level of 0.8 times recorded in the fourth quarter of 2019.

“Leverage shows that we left this year with a stronger balance than what we entered”, he evaluated. This allowed the company to jump 81.8% in remuneration to shareholders in 2020, to a total of 154.5 million reais in dividends and interest on equity.

For 2021, Cefaly said that the scenario is adverse, with emphasis on the issue of costs, and the return of emergency aid may help to give a breath to the demand, “although this is not the only growth engine for the company”.

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